The 2026 CMS Proposed Physician Fee Schedule Rule:  What’s In There for Primary Care and Population Health?

In a Nutshell

Every July, CMS releases a draft proposal describing the changes that they are proposing for the following year’s Physician Fee Schedule (PFS). After a comment period to collect public feedback, CMS finalizes the rule in November for implementation the following January. This year, there is plenty of good news for primary care.  The proposed rule includes provisions that would lead to stronger investment in community-based primary care and better position Medicare to more effectively address chronic condition management and preventive care. Of all of the changes in the 1800 paged proposed rule, two stand out as key and CMS should be applauded for them and encouraged to finalize them.  There is also one proposed change that would be transformative for primary care and population health if it were modified in the final rule.  We’ve got some ideas on how that could be done. Read on! 

This change would decrease the financial incentive inherent in the current rule for health systems to purchase primary care practices and bill an additional facility fee for the same service in the same location as when the practice was independent. 

There are also aspects of the proposed rule that if slightly modified, could be very promising.  For example, CMS adds new Behavioral Health Integration (BHI) Add-On codes for the Advanced Primary Care Management (APCM) codes, bundles that encourage robust team-based care and improved outcomes for patients.  CMS should be roundly congratulated for taking positive steps forward to transition toward hybrid payment for primary care.  But unless patient-cost sharing is waived for these codes, they will not be implemented.  The great news is that CMS can do so and should be encouraged to do so in their final rule as there is a provision for cost-sharing to be waived for ‘personalized prevention care services’.  The preponderance of APCM codes fit squarely under this was widely deployed.  It is easy to submit comments to CMS to let them know how they can improve the proposed rule and at the end of The Detail section, we’ll show you how.

The Detail

Here’s the detail for those who want to understand more.  If we look at the yearly proposed PFS rules over the last decade, there are three underlying themes that are part of a longer-term strategy.  These are reflected in this year’s proposed rule as well.  They are:

1. Encouraging accountable care relationships (linking patients with responsible providers);
2. Moving away from reliance of Traditional Medicare on FFS, and toward Accountable Care Organizations (ACOs) and Advanced Primary Care Management (APCM); and
3. Shifting away from an emphasis on sick care to one that promotes prevention, chronic disease management and payment realignment

Let’s begin by taking a look at more details about the two provisions of the proposed rule that are uniquely transformative for population health:  1) the incorporation of an efficiency adjustment, and 2) the site of service payment differential.

Incorporation of an Efficiency Adjustment:  For the first time ever, CMS is proposing incorporation of an

efficiency adjustment. This is a really important and overdue change and to fully appreciate it, let’s back up and take a look at how payment rates are set now for Traditional Medicare.  Historically, CMS has leaned heavily on the American Medical Association’s Relative Value Scale Update Committee (RUC) to advise on payment values.  The vast majority of RUC members are specialists and subspecialists and the preponderance of literature suggests that the result has been an overvaluing of procedural work and an undervaluing of cognitive work.  The Primary Care Collaborative, National Partnership for Women and Children  and others have written eloquently about the impact on primary care.

Starting in 2026, CMS is proposing an efficiency adjustment that would apply a 2.5% reduction to all codes except those at the heart of primary care, the time-based codes such as evaluation and management (E/M) services, care management services, behavioral health services and services on the Medicare telehealth list. If made final, this would set a fairer path going forward.

CMS anticipates that most specialties would see no more than a 1 percent change in total RVUs. Still, it is a good, policy-forward move overall no matter which side of the aisle you stand on.

Incorporating a Site of Service Payment Differential: For services performed in a facility setting, CMS would reduce the portion of indirect PE RVUs tied to work RVUs to half the amount used for non-facility services. Why is this important?  In the current system, health systems have been acquiring physician practices in part to capture the differential additional payment that can be received under this structure.

In fact, a 2024 study in JAMA found that almost half of primary care providers are now affiliated with health systems and that the share of independent practitioners has decreased markedly over time. 

Further, that when PCPs are acquired by health systems, in the current system they can be billed at a higher amount for the same service. 

The end result would be to provide an immediate revenue boost for independent practices. Additionally, it is a start at stemming rising health care pricing associated with growing hospital ownership of primary care.

Likewise, MedPaC, suggests that as a “prudent purchaser,” Medicare should not pay more for the same service simply because it is delivered in a more expensive setting.  CMS dipped a toe into the site neutral payment water in 2017 with limited site-neutral payment reform and key thought leaders like the Brookings Institution hailed the move as a “positive first step” noting that more needs to be done. The Kaiser Family Foundation 2025 report on Medicare site-neutral payment reforms as a policy lever echoes this sentiment.  This year in the proposed 2026 PFS rule, CMS indeed takes a step forward with the change to the site of service differential.

If CMS Changes One Thing in the Proposed Rule, What Should It Be, and How Can I Make My Voice Heard to CMS?

If there were one modification to the proposed rule that would most benefit patients,  from our perspective, hands-down, it would be waiving the cost-sharing for the Advanced Primary Care Management (APCM) Codes that were put in place by CMS beginning in 2025 and the new Add-On Behavioral Health Integration Codes introduced in the 2026 proposed rule.  These are bundled payments that can be billed on a monthly basis to resource practices for providing a host of care coordination and management services so that they can operationalize team-based care. The problem is that they were a good idea in concept but are not well-utilized because they are hampered by the patient cost-sharing. It’s important to recognize that CMS has the authority to do this under current law, as ‘personalized prevention plan services’ can be provided without cost-sharing.  This provides a viable basis for CMS to waive patient cost-sharing for the APCM codes and the new BHI add-on codes. 

The proposed rule is open for comment until September 12^th. If you want to register comments with CMS about the importance of waiving patient cost-sharing for the APCM and BHI add-on codes (or any other feedback or suggestions) to CMS for consideration in the final rule, it is easy to do. Comments must be submitted by September 12^th .   You may submit multiple comments as an individual and/or an organization and here is how:

1. Go to Regulations.gov.
2. Search for file code CMS-1832-P.
3. Follow the “Submit a comment” instructions. 

It is important to take the opportunity to comment as there will be many strong voices from those who benefit financially from the status quo who do not want to see change.  Your voice counts. CMS takes the comment letters seriously and we have been heartened by the difference that comments have made in the past to make a good rule better.